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QUEST MEANS BUSINESS
Strauss-Kahn Freed on Bail; Is DSK Still A Viable Presidential Candidate in 2012?; New Free Trade Agreement Between E.U. and South Korea; The Tea Trade Has Made Mombasa A Major Port City; Kenyan For-Profit Health Clinic Sets Out to Revolutionize Medical Care In Africa
Aired July 01, 2011 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: He's freed from bail but not from scrutiny. The case against Dominique Strauss-Kahn in serious doubt and tonight we ask, was DSK judged before trial?
The financial revolving door, is Geithner a goner.
It may be Friday. We've a busy hour ahead. I'm Richard Quest. I mean business.
Good evening.
Released on his own recognizance. Dominique Strauss-Kahn is free to leave the luxury cage of house arrest. The sexual assault case against him teetering on collapse. Attention is shifting to his accuser and the serious doubts about her credibility These are DSK in different times, at the IMF, after his arrest, and today, as he leaves court. The three faces of the man who now might just about to escape from the worst accesses of the American judicial system.
Those doubts come from the defense attorneys. The prosecutors say they are still presenting their findings. At a hearing today they did not oppose the judge's ruling to let DSK travel freely in the U. S. However, he will not get his passport back.
(BEGIN VIDEO CLIP)
CYRUS R. VANCE, JR., MANHATTAN DISTRICT ATTORNEY: Today's proceedings did not dismiss the indictment, or any of the charges against the defendant. Our prosecutors, from the Manhattan DA's office will continue their investigation into these alleged crimes and will do so until we have uncovered all relevant facts.
(END VIDEO CLIP)
QUEST: Now, our correspondent Richard Roth is outside the court in New York. Richard joins me now.
What an extraordinary set of events, and it all happened so quickly.
RICHARD ROTH, CNN SENIOR U.N. CORRESPONDENT: That is right. As you well know, Richard, Dominique Strauss-Kahn has engineered many emergency rescue bailouts. Well, he may be getting one himself as bail was drastically reduced from that very harsh house arrest provisions, electronic bracelet, travel ban to Europe.
Now, Dominique Strauss-Kahn, who arrived in court, again with his wife, heard in court that he is now almost a free man. Although the case currently stands against him, but the witness, the hotel maid, her case is in effect collapsing.
As you heard the prosecution saying it is reassessing its case. Outside, following the court hearing, dueling charges and counter charges by the attorney for Strauss-Kahn and the attorney for the hotel maid.
(BEGIN VIDEO CLIP)
BENJAMIN BRAFMAN, ATTORNEY STRAUSS-KAHN: We believed from the beginning that this case was not what it appeared to be. And we are absolutely convinced that while today is a first giant step in the right direction, the next step will lead to a complete dismissal of the charges.
KENNETH THOMPSON, ATTORNEY FOR THE ALLEGED VICTIM: Dominique Strauss- Kahn ripped her stockings. There are holes, there are rips in her stockings. And the DA knows that. The next thing I want to tell you is that when she was fighting to get away, when she was on her knees, and he was sexually assaulting her.
(END VIDEO CLIP)
ROTH: No one knows exactly what happened in the Hotel Sofitel luxury suite near Times Square that Saturday afternoon. However, no matter what the facts there, what in effect, Richard, is happening is that the witness, the alleged sex assault victim, her credibility, has been so severely damaged that no jury would buy what she would say.
And thus, the prosecution is going down that road that, at least for now, they don't opposed Dominique Strauss-Kahn being able now to travel in the United States, though his passport is being held. And will they reduce charges and in effect fearing a big loss and huge embarrassment drop the case in the next few weeks, Richard.
QUEST: Richard Roth, who is outside the court in New York. Those are good questions.
And they are questions for Alan Abramson, a criminal defense attorney in New York, who has worked also as a prosecutor. Alan is with me now from New York.
First question, straightforward, Alan, would you now expect the prosecution apply to dismiss all the charges?
ALAN ABRAMSON, CRIMINAL DEFENSE ATTORNEY: Richard, I have no doubt that in a very short period of time the prosecutors are going to come back into court and they are going to move to dismiss the case against Dominique Strauss-Kahn.
QUEST: And that is because what they-there is reasonable doubt? There is-they, they-if you were the prosecutor what would be thinking now?
ABRAMSON: I think at this point a prosecutors duty is to understand that they don't have a case that they can prove beyond a reasonable doubt. And once they become aware of that, they have no choice. And it is their obligation to dismiss the case. They can't prolong it. Once her credibility has been so-so destroyed, essentially, she cannot be a credible witness for them.
QUEST: Right.
ABRAMSON: And they have no choice but to dismiss this case.
QUEST: So, why didn't they do it today? By going from a horrendously complex bail scenario to basically turning up, when you are ready, in the future. Why not just simply say, it is over.
ABRAMSON: Well, first of all, it was extraordinary that they have gone from a remand status, which means being held without bail, to the highest bail package that I have ever seen, in a New York County case, to release on his own recognizance. That is just extraordinary.
I think, at this point, they have gotten the information that they need but they want to cross the Ts and dot the Is and make sure they have it all. Because they know the kind of scrutiny that they are under. And they are going to have to do something that is unpleasant for them. And they are going to have to dismiss a case. And they want to have it all set up.
QUEST: All right. Now, that-this raises the question: If DSK still harbors presidential ambitions in France, and his lawyers go up to the defense-to the prosecution and say, look, do it. We need a deadline. We need him to be on a plane. We need you to move faster. Will they be at all amenable to that, do you think?
ABRAMSON: I think they will. Under normal circumstances this could take weeks or months. But given DSK's status in France, the loss of the presidency of the IMF, they have an obligation to move quickly. And at this point they have no other place to go. So, I wouldn't be surprised if next week, the latest the week after, they are going to reach their decision and they are going to notify the court that they are going to move to dismiss this case, very, very quickly.
QUEST: And finally, on this question. What was their biggest mistake? Was it arresting him too soon? Bringing charges too soon? I mean, you know, it was a serious allegation. What, to you, was the single biggest mistake they made?
ABRAMSON: Well, Richard, I think it is a combination of those things. I mean, first of all, they acted in haste. This is a case, especially given his status, but it is something that should be done in every case. You have to find out all the facts. You have to do an exhaustive investigation. You have to deliberate in your own mind as to whether you have covered everything that you possibly can. And in this case, either it was because it was Dominique Strauss-Kahn.
But truth be told, this is what happens all the time. An allegation is made. There is an instant determination of someone's credibility. And then the case is presented to the grand jury within five days. They did no investigation here. When they were saying originally that they recovered DNA evidence.
QUEST: OK?
ABRAMSON: They couldn't have possibly been tested in the time period that they were saying. There were just too many leaks to the press. He was tried and convicted in the press. And they just went way too fast and as a result, someone has been dragged through the mud, and it is not right.
QUEST: Alan Abramson joining us this Friday afternoon, from New York. Many thanks, Alan.
The charges against DSK killed his career at the IMF. There is one question we need to ask today: Is he still a viable presidential candidate for 2012? Today the book makers, (UNINTELLIGIBLE) halved the odds of him succeeding Sarkozy next year. Christian Malard, always good to have Christian Malard on the program.
CHRISTIAN MALARD, FRANCE TV3: Good evening, Richard.
QUEST: Good evening. Look, Christian, it is such a simple question, with such a difficult answer for you to give. Is it still feasible, or practical for DSK to stand for next year's election?
MALARD: Well, let's put it this way, if the case is dismissed, if the charges are reduced, especially if the case is dismissed, probably. Tonight I heard, before I came over here, the one with the favorite now, after a scan of the polls, Mr. Holland, the former secretary general of the Socialist Party, who is ahead in the polls for the Socialists. And Holland said, for me it is no problem. If we are to change the calendar of registration; normally the registration to be a candidate inside the Socialist Party would be July 13. And hold on, said in a very fair play way, tonight, he said, if it has to be postponed, the registration, until the end of July, the end of August, I am open to it.
So it means that the favorite now, after Strauss-Kahn, the number one favorite, a top contender now, is ready to delay the calendar for registration. So, if things go quick in New York. If the justice and the case is dismissed, probably, there is a chance. We have to be careful, but Strauss-Kahn might come back as a candidate. And there will be a whole reshuffling the cards inside the Socialist Party, and at the general level.
QUEST: OK. So, balance between this, the anger that French people feel against the U.S. judicial system, and the way they have treated him. And the known facts, now, about DSK, a womanizer, who has an-who perhaps is a little bit too friendly, too frequently, and needs to-lots of problems there. So, which would be the winning policy there, do you think?
MALARD: Well, the thing is if we hear very soon that the case is dismissed and he is free, he is not guilty, or whatever, definitely, French public opinion, I can tell you-and it starts-we can start feeling it, it will be really outraged, outraged. Just mad at the American justice and at what they saw on television the day he has been arrested, six weeks ago.
The French people will be really made at the way the American justice has been behaving. Believe me, we have this feeling coming up very strongly. Now, if Strauss-Kahn is the candidate, we will see if he is still the favorite. Because a lot of people, and I think we have to be careful with that-a lot of people here in France still think that Strauss- Kahn is too much representing the very right wing, of the left socialist party, looking like Sarkozy. And they still think that Holland, the former secretary-general, very left, center, and left at the same time, has maybe more chances. So it will be up Strauss-Kahn to decide, do I go? Don't I go? We will see.
QUEST: All right.
MALARD: But first, we wait the next step following the judicial system, on the 18th of July, will be the next step.
QUEST: We are out of time, Christian, so a one-word answer please. Do you think he is going to be a candidate in the election?
MALARD: If I listen to the Socialist people I talked to tonight, No. But, as I said, you can expect the unexpected in this country, and all the world, you never know.
(LAUGHTER)
QUEST: All right. I'll let you off the hook this time. You get a freebie tonight, for that one. Many thanks, Christian Malard joining us from Paris tonight.
When we come back in just a moment it is a free trade agreement. It is between the European Union and South Korea. It starts now. The consumers, when will we see the benefit.
(DESK BELL CHIMES)
(COMMERCIAL BREAK)
QUEST: A free trade agreement between the E.U. and South Korea is now in force under this deal. Chemicals, cars, plastics, wines, spirits, a lot more, they will flow freely between the two partners.
The E.U. is hoping to get a leg up on the United States and China. Over five years, almost all duties will be removed. And that opens up- look, 98.7 percent of duties will go. It is expected to double trade between the two trading blocs. And the savings for consumers and others, $1.23 billion savings in the first year alone; where does all this leave the Doha round of world trade negotiations. You have bi-laterals taking the place of multi-lateral talks. Pretty much dead in the water, individual countries are strengthening their bi-lateral trades and ignoring the larger agreement.
It is up to companies to pass on the savings to consumers. The E.U. trade commissioner says it is the most ambitious trade deal yet. It is a game changer. I spoke to Karel de Gucht, and asked him, is the accord would be a template for other E.U. negotiations.
(BEGIN VIDEOTAPE)
KAREL DE GUCHT, E.U. TRADE COMMISSIONER: We would like to see this as a backbone for the agreements that we are negotiating with the other Asian partners. But, of course, when you negotiate such a trade agreement, you have also to take into account the level of development in a country concerned.
The level of developments is not exactly the same in India as it is in South Korea. It is not exactly the same in Malaysia as it is in Singapore. It is also that the kind of economy is not necessarily the same. In Singapore, you have an arching influence of services. That certainly that is the case with Malaysia, you see?
QUEST: But the union does have phenomenal-quite formidable powers, doesn't it, in negotiations? Particularly, when you-if you have the entire European Union negotiating as against a Malaysia, or an Indonesia, or a bi- lateral deal. You come to this table with a lot of firepower.
DE GUCHT: Yes, but we are the biggest economy in the world, when the seven member states sit together, but I think that when you negotiate you should be looking for win-win situations. Because these countries, they are very well aware of what is to buy in the market. They are very well prepared. There are also interesting markets for us. In Malaysia, this is a very interesting market for European products. So, the idea that we should, we in a, uh, how would I say? Uh, uh, a position to crush others-
QUEST: Well, I suppose I'm-
DE GUCHT: Is first of all, not true. And secondly, we don't want to do so.
QUEST: Right, I suppose I'm saying are you a bully? As we might say, do you bully them into these agreements?
DE GUCHT: No. No, I mean, first of all, I don't think this a good negotiating strategy. And it would not result in more business.
QUEST: Right.
DE GUCHT: Because once you have the agreement, then you also have to put it in practice. So you have to negotiate in good faith. If not in practice, you will have no results.
(END VIDEOTAPE)
QUEST: That was the E.U. trade commissioner talking to me on the agreement with South Korea.
When we come back after the break, he has a staff of thousands, and a market of millions. Michael Wu, in our special series, "The Boss". And we say farewell to the Hong Kong food king.
(COMMERCIAL BREAK)
QUEST: These are the cake tins and boxes from the food group, Maxim's, from Hong Kong, to Mainland China, to boardrooms and dining rooms. We have followed Michael Wu, the chief executive of Maxim's for the past 10 months. Tonight we say good bye to Michael, and we hear what he has learned over the past year, as he has taken his Hong Kong company and tried to break in to one of the world's biggest markets, in China. It is, of course- (DESK BELL CHIMES) "The Boss."
(BEGIN VIDEOTAPE)
MICHAEL WU, CHAIRMAN & MANAGING DIRECTOR, HONG KONG MAXIM'S GROUP: This year is a big focus to enter China.
UNIDENTIFIED MALE: From the day our cameras started rolling back in September of last year, Michael Wu had a clear business plan in place.
WU: China is such big market in itself, that probably for the next 20, 30 years, that would be our only focus.
UNIDENTIFIED MALE: Over the following 10 months he made this his growth strategy.
WU (translated text): I want to explain this. Why do we need this? Because in three or four years, we need to be here. This is our goal.
UNIDENTIFIED MALE: Working with his team through decisions from branding to personnel, he looked for ways to break this major market, aiming not only to enter it, but more importantly, to conquer it.
WU: We see huge potential for our brand all over China. But, of course, it is not as easy at that.
UNIDENTIFIED MALE: As his army prepared the attack, Michael turned his attention to matters closer to home, managing and recognizing his staff.
WU (translated text): I want to encourage you all. You've done a great job.
UNIDENTIFIED MALE: As we followed him from his office and into the meeting rooms we learned what it took to lead a company of 14,000 people; hard work, motivation, and appreciation.
WU: I think recognition is a key element of motivation. Just a very, very simple recognition, just for those staff to be appreciated, that we know that they have done a good job. Just a simple pat on the back.
UNIDENTIFIED MALE: His tactics, albeit simple, helped him retain employees in Hong Kong. One such strategy, asking his staff to write to him anonymously. A clever move that gave him a rare insight into his company.
WU: They are free to say, and write, what they really feel.
UNIDENTIFIED MALE: All along he showed us that being at the top required intensity and ruthlessness. After all, he is there to make money.
WU: What it really aims to achieve, is to connect more closely with the customer, get their loyalty, and return to increase our sales.
UNIDENTIFIED MALE: Helping him to achieve just that, perseverance and momentum. We saw Michael renovate-
WU: In the restaurant business it is all about details. If you don't do that, you are never going to get the big picture right.
UNIDENTIFIED MALE: Innovate.
WU: We will open slowly. We are not going to rush to build this brand.
A chocolate, sesame roll.
UNIDENTIFIED MALE: And create. And throughout, he has the final say.
WU: I'd like this to be a bit more-yes, a bit more strong sesame taste.
UNIDENTIFIED MALE: His biggest challenge, and perhaps his biggest learning curve came from the rapid expansion in Mainland China.
WU: As a foreigner coming to China, we pay the price of learning the steps.
UNIDENTIFIED MALE: And learn he did. The sheer size of China made delivering his products a nightmare.
WU: In Hong Kong we don't have to worry about logistics, because everything is so small. But in Guangdong, now, where everything is spread out so far, logistics is a big cost and a big concern.
UNIDENTIFIED MALE: On top of that, he faced a turbo-charged economy. So retaining staff was both challenging and costly.
WU: Hiring people is very difficult now. We are having a huge turn over in the staff just because the economy is very active and it is very easy for them to get jobs elsewhere.
UNIDENTIFIED MALE: Despite the difficulties of doing business in Mainland China, Michael is battling on with his expansion. With plans to open at least six stores in Guangdong in the next six months. Regrets? He says, he has none. Mistakes? A few, to learn from.
WU: In China it is a learning process for all of us. And we tell our staff that, first of all, don't assume anything. The biggest mistake we can make is to think that we know about the Chinese consumer.
UNIDENTIFIED MALE: So, 10 months on since our first meeting, we say good bye to an older and wiser Michael Wu. A practical and inspiring boss and a very candid one at that.
WU: It is always good to reflect on what you have been doing, what you have said, on the decisions you've made. But in normal life you don't get that chance, because you don't see a replay of what you are doing. But seeing yourself on TV, it is great self awareness. And I think I have learned a lot from that.
UNIDENTIFIED MALE: Next week, on "The Boss": As one door closes in Hong Kong, another opens in Macao.
FRANCIS LUI, VICE-CHAIRMAN, GALAXY ENTERTAINMENT GROUP: I like to say that I'm a visionary.
UNIDENTIFIED MALE: We welcome Frances Lui, he is the vice chairman of Galaxy Entertainment Group, as our new boss. That is next week on "The Boss".
(END VIDEOTAPE)
QUEST: Fascinating, out goes one, in comes the other.
The old saying goes, never change horses in mid-stream. Could Barack Obama have to solve the country's economic problems without his closest ally? Tim Geithner, is he on the way out, too? What does it all mean, after the break.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS. This is CNN and on this network the news always comes first.
(NEWSBREAK)
QUEST: Barack Obama, could be about to lose his economic right hand man. There are rumors that Tim Geithner, the Treasury secretary, is mulling over whether to leave his post as secretary, once the country's debt ceiling debate is resolved.
News reports say Geithner wants to be in New York full time, where his son goes to school. Now if he were to leave it would mark the end of the president's band of economic advisors. Every other member of the economic A team has moved on. Let me show you what I mean.
Christina Romer was head of the Economic Advisory Council. Had almost daily meetings with Obama. A huge supporter and pushed forward on health care. She stepped down last December, returned to Berkeley. Lawrence Summers, former Treasury secretary, the man driving economic policy. He stepped down at the end of last year, to return to Harvard, just in time before he had taken so much leave, his tenure of professorship was coming to an end.
Paul Volcker, the granddaddy of American politics, chairman of an economic advisory panel, former Fed chairman, tough on Wall Street; the so- called Volcker rule. He left when his term expired end of January. Austan Goolsbee, who has regularly been on this program, he started off over at the vice president's office. Then he became chairman of the Council of Economic Advisors. Now he has gone back to academia. Now you see them, now you don't. So there you see, Goolsbee leaves in the summer.
What does it all mean. Wolf Blitzer joins me from Washington.
Wolf, first of all, is it your understanding, because you are well plugged in, that Geithner is seriously thinking of going?
WOLF BLITZER, CNN ANCHOR: He was toying with it because his son is finishing up high school; he has been here in Washington, but his son wants to spend his last year in high in New York. So, if he stays, Geithner, that means commuting on weekends. It is going to be a little rough. So he was toying with it. But yesterday he made it clear. He was in Chicago. I was in Chicago, also, at the Clinton Global Initiative America Conference.
And at that time, Timothy Geithner said flatly, in response to a question from President Clinton, he said for the foreseeable future he is staying in. He says he loves this job. He has done nothing else. He is about to turn 50 years old.
Coincidentally, we were both on the same flight from Chicago, back to Washington, Reagan National Airport, last night, had a chance to speak with Timothy Geithner. And I got no reason to believe that he was leaving any time soon. He has toyed with the idea, but I think for the foreseeable future, as he says, he is going to stay as the secretary of the Treasury.
QUEST: The team that was put together, the "Financial Times" had an editorial this week, in which it basically said it was a dream team that didn't really sell Obama's stimulus package, his economic policy, and now he has been left sort of with the also-rans, and a few other people. Is that a feeling in Washington, that the economic team that has changed is not as good as the one that it had?
BLITZER: Well, I'm not exactly sure that the original team was such a great dream team. Christina Romer, who was the head of the Council of Economic Advisors, at the White House, remember, she put out that report early on, predicting that the unemployment rate, within a year or so, after the huge economic stimulus package was enacted, to go down to below 8 percent in the United States. It is now still hovering at 9.1 percent, so the administration has been ridiculed for that low estimate early on, as a result of the economic stimulus package.
There was always friction, as you know, between Larry Summers, who was the head of the president's Economic-National Economic Council in the White House, and some of the other players. Austin Goolsbee was well-liked. He will be a significant loss. You didn't mention Jared Bernstein, who was the top economic advisor to Vice President Joe Biden. He has now left, as well.
But there are some good people in there. The new head of the National Economic Council, Gene Sperling came over from the Treasury. Lots of experience. He worked for Bill Clinton back in the '90s. He knows what he is doing. He is pretty highly respected. And Jack Lew, the budget director, taking over for Peter Orszag. He is highly respected as well. So there are some good people there.
But you know what, when all the dust settles is there going to be a debt ceiling? Is that going to go up? Are they going to be able to renew it? Will unemployment go down? What about jobs? So those are tough issues in the global economic uncertainty. As you know, Richard, better than most, it is hovering over all of these decisions here in Washington.
BLITZER: Wolf Blitzer, in Washington. Thank you for taking time out from "THE SITUATION ROOM," to come and join us tonight, on QUEST MEANS BUSINESS. Many thanks for that.
Now, the Treasury can't stress enough how crucial the debt ceiling deadline is. As Wolf was just saying. And he reiterated it to Congress today, there will be no second chances after August 2. Postpone and the U.S. will start missing millions in payment. The national debt already is huge and is spiraling.
Right now, it is $14.5 trillion dollars, and rising by the second. It is an enormous amount of money. A trillion is a thousand billion. So just count the number of zeros. Felicia Taylor asked the president of the St. Louis Fed, what he thought of Tim Geithner's stance. And asked him would a default, if it was to happen, even a technical default, would mean for the U.S. economy?
(BEGIN VIDEOTAPE)
JAMES BULLARD, PRESIDENT, St. LOUIS FEDERAL RESERVE BANK: I think the consequences would be unpredictable. And I think it would, you know, markets would begin to doubt U.S. resolve to continue to maintain its very high status in the world, triple A rating, never defaulted on a debt. I think it would be troublesome for the U.S. economy.
FELICIA TAYLOR, CNN FINANCIAL CORRESPONDENT: Certainly, indeed. Where you at all surprised by Timothy Geithner's announcement-well, not announcement-but possible discussions that he would be leaving his post, at the Treasury?
Well, I worked with Tim some at the Federal Reserve here. Of course, it has been a very tough job to be Treasury secretary during this time. So, it wouldn't be surprising if he wants to do something else. It didn't sound to me, like it is a definitive statement at this point.
(END VIDEO CLIP)
QUEST: That is the chairman of the St. Louis Fed. Better than expected manufacturing figures, lifting U.S. stocks, this Friday. The Dow, as you can see, is showing a gain. It is up 159, 160, or so points. A good start for the second half of the year.
The SEC (ph) finally shows Zygna creator of the Farmville online game, is going to launch an IPO. Million-multi-billion no doubt. Zygna has a big advantage over recent tech flirtations. It is profitable. Earning more than $90 million last year.
A meeting of Eurozone finance ministers on Sunday, over Greek debt, have been canceled. Instead we'll now have a conference call on Saturday, where they are expected to sign off on the further emergency funds for Athens, but without there had been a default. The European markets, up, up, up, and up. Best gains were in Russia, where the RTS was up some 1.5 percent. And the reason for that was confidence after a bailout for the country's ever biggest bailout banking crisis. The Bank of Moscow is to get $14.2 billion. A series of bad debts, deteriorating assets, had really bitten the bank hard. It has been rescued. It is the largest bank rescue in Moscow, well, in Russia, for that; $14 billion. You will be finding out in the weeks ahead exactly where the money went.
In a moment the weekend weather forecast. Jenny Harrison has got to tell me what it is like in Monte Carlo, where I'll be this weekend.
(COMMERCIAL BREAK)
QUEST: The weather forecast now. Jenny Harrison has morphed into Guillermo. I'm sure there is a joke there somewhere. I'm not touching it with a 10-foot pole.
Listen, I do need to know, I'm going to Monaco to help cover the wedding of Prince Albert, II, and Princess Charlene. You don't by any chance know what the weather is like there this weekend?
(WEATHER FORECAST)
QUEST: Now, what is your password, finally, to unlock your mobile phone? I don't expect you to tell me because I probably already know it.
(DESK BELL CHIMES)
The most common password, you obviously know it, is 1234. I read this article. If you have a laptop, head to Facebook.com/cnnquest, to read the tips for choosing the safest password. And I have put it on our Web site.
And that is QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. Thank you for joining us this week. Whatever you are up to in the hours ahead.
(DESK BELL CHIMES)
I hope it is profitable. "MARKETPLACE AFRICA" is next.
(COMMERCIAL BREAK)
ROBYN CURNOW, HOST: I'm Robyn Curnow. You are watching MARKETPLACE AFRICA in Johannesburg, South Africa.
Now we are going to take you straight away to Kenya which is the world's largest exporter of black tea. Most of it is traded at the Mombasa Tea Auction. So, for this week's "In Focus" look, we are going to take you to the center of the tea trade.
(BEGIN VIDEOTAPE)
ISHA SESAY, CNN CORRESPONDENT (voice over): After water, tea is the most popular beverage in the world. And the black tea variety has helped position the Kenyan port city of Mombasa as an important hub in the tea trade.
UNIDENTIFIED MALE: Lipton, 22, 24.
SESAY: What goes on here provides an inside look at trends in the industry as one of the world's largest tea auction centers, trading tea from across Africa, this is the place that helps determine the global benchmark price for tea.
TOM MUCHURA, BROKER, AFRICA TEA BROKERS: The growth of Mombasa, over the years, is basically the fact that it has become important as an outlet, or a marketplace for the producer and his reliance on the auction place. Because there is much more competition, better competition.
That lot for you must give us a little more, 186, I'll meet you here, sir.
SESAY: Last year more than 400 million kilograms of tea were exported through Mombasa, with the auction generating $1.2 billion. Brokers like Tom Muchura work to ensure that sellers get a fair price.
MUCHURA: The buyer comes into the auction to get that tea as cheap as possible. That is his business. The broker comes in to make sure that he gets the correct market price for that tea.
SESAY: Muchura has been with Africa Tea Brokers for 17 years. He says the role of a good broker goes beyond this auction room to improving the quality of tea produced on the farm.
MUCHURA: You must understand every aspect of production. Because you are telling the producer, who is a farmer, what kind of tea he is making and its acceptability in the marketplace.
PETER KIMANGA, TEA BUYER: That's a great cup.
SESAY: Peter Kimanga is a tea exporter. He sells to markets across the world, which depend on his knowledge experience and taste buds.
KIMANGA: When I'm tasting these teas I look at the brightness of the cup. I'll look at quality of the cup. I'll look at keep-ability, the keeping quality of the cup. So, collectively those will form the basis of the price I'm going to pay. It has to be a very bright tea. It has to be, it has to have the strength. It has to keep well after (UNINTELLIGIBLE) from that you learn so much, what would have been on the farm. So that is goes into paying the price.
SESAY: Kimanga, who has been a player in the industry for more than two decades, says different countries have varied tastes in tea.
KIMANGA: So, we kind of try to look at what different markets will require. If you go to Pakistan, they go for very thick color teas. They won't buy a golden variety. If you go to West Africa, West Africa, Northern Africa, they don't go for very thick teas.
SESAY: The biggest markets for Mombasa's tea export are Egypt, Pakistan, and Britain. But they don't drink as much of their own products in much of Sub-Saharan Africa.
KIMANGA: If you come to Africa, tea consumption has not been well embraced by the communities, because of cultural beliefs.
SESAY: The tea industry faces other challenges as well. Not only will many Africans not drink it, but some farmers no longer grow it.
BRIAN NGWIRI, MARKETING MANAGER, EAST AFRICA TEA TRADE ASSN.: The tea industry is threatened by a limited land use. You find that land available for growing tea is shrinking. So you see people are going away from tea, which is seasonal, to food crops that is, that is available to grow throughout the year.
UNIDENTIFIED MALE: 230, which one?
SESAY: For now, increased demand around the world, following the 2009 African drought, has caused the price of tea to rise. Providing a much needed income boost to more than 3 million East Africans who depend on tea and the continued success of Mombasa's Tea Auction. Isha Sesay, CNN, Atlanta.
(END VIDEOTAPE)
CURNOW: OK, let's take a look at some more numbers. Now, the Tea Board of Kenya says the country supplies about 22 percent of the world's tea. Domestic consumption accounts for about 5 percent of production. And last year Kenyans drank 19 million kilograms of tea.
(voice over): A healthy business model, next, how one organization in Kenya hopes to impact the health and economy of the local community.
(COMMERCIAL BREAK)
CURNOW: The need for doctors in small towns and rural villages across Africa is enormous. One organization is hoping to change that with its for-profit business model. LiveWell Health Clinics is setting up self- sustaining medical facilities in low-income areas. They are starting off in Kenya. Well, our Maggie Lake caught up with Liza Kimbo, she is the director of Live Well.
(BEGIN VIDEOTAPE)
LIZA KIMBO, DIRECTOR, LIVEWELL HEALTH CLINICS: All we are saying is take models that have been proven, around the world, that are affordable, low-margin models, and apply them to health care. And in that way reach many, many more people. But at the same time cover your costs so that you can be profitable.
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: What about training up and educating staff. Is that a big upfront cost when you are thinking about doing this and having these clinics spread throughout the country?
KIMBO: That ends up being one of our other significant challenges that we can't overlook. And that is availability of trained health care workers. And for our model, as we are reaching out now, to address the masses, with low income, we also looked at what health care workers are available, in Kenya, my country, to address this need. And we find that Kenya, unlike many other African countries, does have a large pool of trained community workers.
LAKE: Important when you are choosing Kenya, as a starting off point, that you've got that resource there.
KIMBO: Yes, yes, you say we have these resources, but they are not being optimally utilized. And so we do have nurses that we can engage in primary care. The government works with them already. Private sector, too, can really build on this resource that is available and have them at the forefront of the education of the community. And for the behavior change that is necessary.
LAKE: Of course, all of this costs money. How are you funded?
KIMBO: It is a big challenge because we set this up as a for-profit. We are bold enough to say, yes, we could have a health care program, private sector addressing low-income groups that, you know, can be an approach in a for-profit manner. My background and what I have done before has been in the NGO sector. Public health tended to fit in with the aid agencies, but it is my experience having worked through that, that made me realize that we could approach this whole issue of sustainability, long- term sustainability, by building a for-profit model. Because then we will not be reliant on donor funding.
What we are doing is looking for investors, we are looking for people to come in and partner with us, in order to really, you know, realize the dream of building this up. But it is something that, you know, has been difficult.
LAKE: When you are making your sales pitch, to would-be investors, when you target low-income, in other sectors, like mobile phones, like retail, you say the price points are low, but the volume is huge. Is that key here?
KIMBO: That is exactly it. The volumes are huge. Who doesn't need health care? The answer is going to come from coming up with innovative micro-insurance programs that are accessible to the low-income groups. And in that way, then they can access care, whether they have in their pocket or not.
So, those are the challenges we are looking at to say the volumes are there. The inputs are there. The human resources are available. The medication is available, the-all the inputs you need to provide good primary care, are there. What we need is innovative health financing mechanisms. And that is what, you know, now we are really talking partnerships. Looking at insurance companies; who can come in and bridge this gap and able the low-income to be able to pay for their care.
LAKE: Well, what are your expansion plans? Do you want this to be throughout the country? How do you plan to grow this?
KIMBO: What we have done is started in and focused on one community, a community in Kayala (ph), which is a fairly urban area, out of Nairobi. Population is about 125,000 people. So, in that area we will concentrate our resources by putting in an anchor clinic, that is a larger full service clinic supported by smaller satellite clinics. We are going to start with about four.
LAKE: You are aiming to be a global brand, but what is going to be the first sort of litmus test for success for you?
KIMBO: The foundation has to be very strong. And for us the foundation is essentially the unit economics, the economics of every single unit that we set up. So we define our unit as an anchor clinic and four satellite clinics. Those have to be self-sustaining. They have to break even and be able to sustain themselves for us to now build on this model, you know, and now deal with the issues of scale, taking it out to more and more places. So that is the first, you know, for me, that is the foundation. And we are very well on our way towards, you know, achieving, you know breaking ground on the first unit. So I am encouraged that with that first hurdle accomplished, then we can build on this.
(END VIDEOTAPE)
CURNOW: That was Liza Kimbo of LiveWell Health Clinics. Now here is what is trending this week.
Nigeria's economy could overtake South Africa's in less than 15 years. That is according to the financial services firm, Morgan Stanley. Economists expect Nigeria to become the continent's largest economy by 2025, because of rising oil prices and increased consumer spending.
Just a reminder to check out our Facebook page. You can leave thoughts about this week's interview and look at some behind the scenes photographs. There are also links to our Twitter and Web pages.
For me, Robyn Curnow, here in Johannesburg, thanks for watching.
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